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SEC Unlikely to File Charges in Lehman Case: Memo

WASHINGTON – The staff of the U.S. Securities and Exchange Commission has concluded its investigation into Lehman Brothers Holdings and will not likely recommend charges, according to the excerpt of a memo sent to Reuters.

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The excerpt, which was not dated, was sent along with an anonymous letter to Congress alleging that SEC Chairman Mary Schapiro made inaccurate statements about the agency's Lehman probe during a hearing last month.

Schapiro told a House Financial Services panel on April 25 that Lehman "remains under investigation" and "is still under review."

The copy of the internal memo sent to Reuters states that, "The staff has concluded its investigation and determined that charges will likely not be recommended."

It did not give an indication of when the staff would give its final recommendation to the SEC's commissioners.

John Nester, an SEC spokesman, would neither confirm nor deny the authenticity of the memo, but noted that Schapiro was correct when she told Congress that the Lehman matter is still under review.

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"No final decision has been made" about the case, he said.

Lehman was the fourth-largest U.S. investment bank when it filed for bankruptcy in September 2008, triggering a panic that threatened the global financial system.

Lehman's court-appointed examiner, Anton Valukas, issued a report in March 2010 alleging that Lehman used accounting gimmicks and had been insolvent for weeks before it filed for bankruptcy.

The copy of the memo sent to Reuters said the SEC has been investigating "potential financial & disclosure fraud by Lehman and certain officers and employees."

It said SEC staff is investigating whether individuals made misrepresentations or omissions about its commercial real estate portfolio, liquidity, capital situation, and its overall financial health.

When asked about Lehman at the hearing last month, Schapiro said "the illegality of conduct is sometimes not quite as clear-cut as it seems to be or as reported to be, and it makes bringing cases extremely difficult."

In the anonymous letter that was also mailed to Reuters, the person called on the SEC's inspector general's office and the House Financial Services Committee to investigate whether or not Schapiro lied under oath to Congress.

The letter addresses Republican Representative Scott Garrett, a member of the House Financial Services Committee.

A spokesman for Garrett said the office has not received the letter or the memo.